Information and knowledge are fundamental resources for economic and social development. Information and communication technologies (ICT) foster the development process by creating new opportunities in the creation, transformation, and distribution of information and knowledge, reducing transaction costs, and contributing to the possible acceleration of innovation processes. The ICT revolution has given rise to the so-called information and knowledge society, where technology develops as a result of economic, social, institutional, and cultural contexts, skills, and incentives. In Latin America and the Caribbean, the information and knowledge society is less developed than in other regions of the world— especially in comparison with the countries in the Organisation for Economic Cooperation and Development (OECD)—and there are huge differences between the countries in the region as well as within each country.
The development of e-Government is particularly important in many countries of Latin America and the Caribbean where the public sector plays a decisive role in the country’s economy thus leading to an improved productivity and an increased competitiveness.
ICT in economic and social development
For economic and social development, Information and knowledge are a prerequisite. As such, Information and communication technologies (ICT) aid the development process thereby creating new opportunities in the generation, transformation and distribution of information and knowledge, lowering transaction costs and accelerating the process of innovation. So to speak, the ICT revolution has created the Information and Knowledge Society, where technology develops in function of economic, social, institutional and cultural contexts, capabilities and incentives. However, when compared to the OECD nations the Information and Knowledge Society is less developed in Latin America and the Caribbean than in other regions of the world thus presenting extensively differing patterns of development within the Region, and within each country.
Dissemination and usage of ICT in Latin American and the Caribbean
The latest indicators confirm that countries in Latin American and the Caribbean have experienced significant progress in the penetration of ICT in recent years, much more so than in other regions of the world, starting from low or very low levels. For example, the penetration of the Internet in the region increased 211% between 2000 and 2005, and the penetration of home computers increased 170% between 1999 and 2003. However, despite this progress the levels of ICT penetration in the region and its absorption capacity continue to fall far short of those in industrialised countries. Only 10.3% of the people in the region have Internet access (compared to 67.8% in the United States), and 6.6% of the population has a home computer (compared to 65.98% in the United States).
“The penetration of the Internet in the Latin America and Caribbean region increased 211% between 2000 and 2005, and the penetration of home computers increased 170% between 1999 and 2003. However, despite this progress the levels of ICT penetration in the region and its absorption capacity continue to fall far short of those in industrialised countries.”
Unfortunately though, in Latin America and the Caribbean the spread and appropriate usage of ICT has been affected owing to various factors – (a) the limited institutional ability to articulate and promote public policies for the distribution and use of ICT; (b) the limited network coverage and the high costs of access to ICT; and (c) the lack of digital education enabling interaction with ICT and the scarcity of content that is of interest to the local population. Nonetheless, there are several successful experiences as well in ICT for development in the Region. Generally, the factors characterising these experiences are political support, an integrated and longterm vision, institutional and technical capability, the participation of the private sector, a favourable environment (infrastructure, regulatory framework), and projected levels of investment.
The IDB strategy: disseminating ICT for development
Covering 2006-2010, the Inter-American Development Bank (IDB) has developed a strategy with a primary focus to increase the effectiveness of the Bank in advancing ICT for the economic and social development of the countries in the Region. Keeping in view the challenges faced by the countries of the Region in spreading ICT for development, the strategy incorporates the integral dimension of ICT in various sectors, with priorities in the following areas: (i) Creation of a favourable environment for the distribution and use of ICT, (ii) Modernisation of the State, (iii) Competitiveness, (iv) Social Development, (v) Regional Integration, and (vi) Environment and Natural Disasters. With these priorities, the strategy incorporates the comprehensive dimension of ICT in the various sectors as a means of contributing to development in the countries of the region. Creation of a favourable environment for the distribution and use of ICT: Contributing to development through ICT requires an environment that facilitates its spread and use in institutional, business, and social contexts. The strategy would support the development of initiatives that contribute to complete the process of liberalization of the telecommunications market, increase the use of ICT, combine regulatory measures with public-private initiatives to extend connectivity andadapt tariffs, and create assurance and confidence in the public, social and commercial use of ICT through the formulation and application of norms, edicts and/or laws, among others.
ICT in support of Modernization of the State: ICT is a key tool in modernising and transforming the State in order to achieve a modern, professional, and transparent public administration in such a way as to improve the efficiency and transparency of the management of expenditures, promote the participation of society in the formulation of public policies, improve and extend the coverage of public services, especially to the excluded sectors, increase fiscal responsibility, and decrease fraud.
ICT in support of competitiveness: Innovation, technology transfer, and the use of ICT are essential skills for making companies more productive and more competitive, and therefore are decisive factors in strengthening the economy. This strategy seeks to promote initiatives to promote and support innovation, transfer, and implementation of ICT for purposes of production, competitiveness, and sustainable economic growth, while according priority to SMEs, micro-firms, and rural producers, as well as to sectors showing a high potential for economic development and job creation such as the ICT sector, which is helped by its inherent technological advantages in competing in a global market.
ICT in support of social development: Social development is a fundamental part of the Bank’s commitment to reduce poverty, promote social equity, and improve well-being in the region. As part of its Social Development Strategy (GN- 2241-1), and in line with the Millennium Development Objectives, the Bank intends to help countries accelerate social progress through actions in the health care, education, and housing sectors. The dissemination and appropriate use of ICT can improve the efficiency and effectiveness of efforts promoted by the Bank to accelerate social development and expand its impact.
ICT in support of regional integration: Regional integration is a tool to achieve a strong position vis-à-vis the forces of globalisation through the creation of regional public goods (RPGs) designed to promote sustainable economic growth and reduce poverty while providing the economies with a better position to face the forces of globalisation. ICT can contribute to the regional integration process, specifically in the promotion of regional infrastructure, the consolidation of regional markets, and institutional strengthening.
ICT in support of the environment and in responding to natural disasters: Environmental protection and natural resource management are increasingly important in achieving sustainable development and helping to improve the overall quality of life. The strategy seeksto incorporate ICT into the determination of priorities related to the environment and the protection of natural resources, and in the prevention, mitigation, and management of natural disasters.
Mobilisation of resources for ICT for development
The IDB strategy in ICT for development aims at building up the capability of the Bank to effectively mobilise financial resources to the borrowing member countries of the Region, through solid loan and technical assistance programs, which leverage the utilization of ICT as means to enhance the sustainable social and economic development of the Latin American and Caribbean Region.
First, the strategy aims at assisting the countries through quick response financial facilities including technical cooperation funds (CT/Funds) and regional technical cooperation resources (RTC/FSO) to support base studies, preinvestment activities, project preparation activities and demonstrative ICT for development projects. Second, the strategy represents a driver to strengthen and more fully utilise the Bank’s lending framework through both, its Fund for Special Operations (FSO) and Ordinary Capital (OC) fund. In particular, with respect to facilitating the access of the Region to flexible lending instruments to more effectively tap the potential of these rapidly emerging and changing technologies as part of the development projects of the Governments of the Region, while at the same time setting the stage and incentives for further and complementary private sector investment in connectivity and ICT for development in general.
“The IDB strategy in ICT for development aims at building up the capability of the Bank to effectively mobilise financial resources to the borrowing member countries of the Region, through solid loan and technical assistance programs…”
The Bank has made available to its borrowing member countries a new financing framework aimed at facilitating the design and execution of primary investments, and to accelerate, among others, their access to ICT and other technologies within their social and economic development processes. This is in response to the Bank’s experiences regarding such a framework that is consistent with the sustained growth in the demand for the incorporation of ICT in its various development programmes.
Moreover, with the objective of identifying, offering and facilitating access to new technology solutions, and setting the stage for solid loan operations of a wider scale, the Bank has been continuously offering an increasing array of technical cooperation resources through a number of financial facilities which include, among others:
(b.) the “ICT Innovation Program for E-Business and SME Development” (ICT4BUS), a US$15 million facility financed with resources from the Multilateral Investment Fund (MIF), and whose objective is to contribute to the improvement of the competitiveness of small and medium sized enterprises (SMEs) in the Latin America and Caribbean Region by expanding their access to new ICT solutions and services. The Program comprises the provision of non-reimbursable funding to non-forprofit business/umbrella organisations for the implementation of pilot projects, and the dissemination of new knowledge and lessons learned. Projects mainly test innovative ICT services and solutions for SMEs, in the areas of value chain integration, workplace productivity and efficiency, and market penetration; and
(c.) the recently established “Knowledge Partnership Korea Fund for Technology and Innovation”, a US$25 million facility which, among others, seeks to set the stage for the implementation of technical cooperation operations aimed at the promotion and development of institutional capacity, innovation and new productive technologies with highimpact in social development, poverty reduction and institutional strengthening process, through the deployment of ICT solutions in the countries of the Region. In particular, the new “Korea-IDB” partnership has made new resources available for knowledge and technological innovation towards the development process of the Region.
“The Bank is increasingly incorporating ICT components into programs and projects, while placing increased importance on the framework of each operation.”
Also, the Bank is currently working on the identification and establishment of a number of individual bilateral agreements with it donor countries to expand the stated “Trust Fund for Information and Communication Technology for Development” into a “multi-donor financing facility” with reach to all borrowing member countries of the Region, and aimed at increasing the number, scope and impact of technical cooperation operations in the following strategic areas of intervention: “ICT for governance and modernization of the state”, “ICT for social development and poverty reduction”, “ICT for business development and economic growth”.
As such, the Bank’s ICT for development strategy seeks to create the necessary conditions to facilitate the mobilisation of private sector resources in ICT for development in direct collaboration with the Bank, and with public and civil society sectors in the countries of the Region. This with the aim of stimulating and encouraging an expanded private sector role in ICT for development, and in direct contribution to the Bank’s efforts of, among others, promoting social development, competitiveness, modernisation of the state and regional integration. In particular, with the premise that an expanded private sector role should balance market processes with increased corporate social responsibility and strengthened partnerships in Bank-led processes, as part of a “blended strategy”. In this context, the Bank is currently working on the identification and design of the institutional, legal and technical mechanisms for the establishment of a “multi-donor financing facility with private sector participation”, which will allow for the effective participation of leading ICT companies in technical cooperation projects led by the Bank in the Region, and which require modern technical concepts and models, leading and innovative technologies, and, overall, technical and financial leverage.
The Bank would also soon initiate the design of a financial programme to support community development through ICT, with an implementation scheme similar to the ICT4BUS Program, and aimed at community leaders, entrepreneurs and local-base organisations that seek support in the deployment of ICT for social development purposes and, in particular, in alphabetisation, education and training, health, culture, gender and equitable sustainable local development, among others.
Finally, it may also be noted that the platform of the World Summit for the Information Society (WSIS) represents a unique opportunity for the Bank to continue consolidating its interinstitutional partnerships while, at the same time, strengthening its role and commitment to its borrowing member countries of the Region to work in the design and implementation of the most effective financial instruments to attend their rapidly changing and growing demand for ICT solutions and applications, under a sustainable and dedicated development financing framework. Precisely, the Bank will lead during 2006 a number of regional activities and events in ICT financing and consistent with the resulting Declaration of WSIS-Tunis 2006.